Economic impacts of the Russian-Ukrainian crisis on African countries: Threats and opportunities
the Russian-Ukrainian war and the threat of the use of nuclear weapons affected many conditions, especially the economic ones in Africa, Asia and Europe, as a result of the expected crises regarding the availability of basic commodities, which makes the whole world apprehensive if the scope of this war expands. The Russian-Ukrainian crisis is the beginning of a new era in international relations. Because it will have great impacts and repercussions on the world level.
The crisis came to threaten the progress made by the African continent after gradually recovering from the Corona pandemic. Many countries in the continent are exposed to a high degree of risk from the effects of war, specifically due to the high prices of energy and food, the decline in tourism and the potential difficulty in accessing international
This conflict is likely to intensify socio-economic pressures in Africa, expose it to public debt risks, and cause sufferings from the pandemic, already afflicting millions of households and businesses, especially given the dependence of the continent’s countries concerning the majority of their consumption on imports from abroad, which will lead to a sharp rise in the prices of the food commodities such as wheat, which directly depend on Russia and Ukraine.
The paper aims to examine the economic impacts of the Russian-Ukrainian crisis on African countries and present the threats that result from this crisis, the opportunities that may result from it, and finally the measures through which the international and regional organizations in Africa deal with the crisis, through the following points:
First: the Economic impacts of the Russian-Ukrainian crisis on Africa
The Ukrainian crisis could reduce the economic growth of the continent, which was supposed to rise a little this year after “Covid-19” and reach 3.7% as shown in the following figure, and the growth of exports will be around 4% and not 8.3% as expected.
Ukrainian exports to Africa have grown steadily, from 210 million US dollars in 1996 to more than 4 billion US dollars in 2020, while Russian exports to Africa have reached about 20 billion dollars in 2020, which is only about 2% of Africa trade with the world, which suggests that the impact of trade will be marginal. However, a few countries will be affected more than the rest, with Malawi’s trade with Russia amounting to 8.1% of its total foreign trade, followed by Uganda with 7.2%, then Senegal with 4.4%, Niger and Congo with 4% each, in addition to the impact on Kenya’s tea industry, with Russia among the top five consumers of Kenyan tea.
Sanctions on Russia are likely to dampen the flow of Russian investments to Africa a bit, and the uncertainty around the global economy will also affect other international investments. South Africa has huge investments in Russia that exceed the 80 billion Rand barrier (about 5 billion dollars), while the total Russian investments in South Africa are about 23 billion Rands (about one billion dollars).
Russia provides aid to Africa with about 400 million dollars annually, about 60% of which is distributed through international organizations, such as: the World Food Program and the United Nations Refugee Agency, and in light of the current tensions between Russia, Europe and the United States, against the background of the Ukrainian crisis, this aid may be affected in volume and distribution channels.
Russia-Ukraine conflict has cast a shadow over the African tourism sector, which is still recovering from the repercussions of the Covid-19 crisis, as two African countries are among the list of the ten most attractive destinations for Russian tourists in the world, namely Seychelles and Egypt, and Russian tourists represent 16% of the total tourists in Seychelles, and 7% of all tourists in Egypt
Second: The Economic threats of the Ukrainian crisis on Africa
-Global oil markets faced a double blow, which led to a significant increase in oil prices, as the Russian-Ukrainian crisis comes at a time when European countries have already faced an energy crisis since 2021, amid a combination of factors, including the epidemic, limited supply and increasing geopolitical tensions, which have direct effects on oil prices in the entire world, including Africa such as South Africa, Nigeria and Zambia.
-The greatest danger that the Russian-Ukrainian crisis could pose on the African continent is the possible rise in food prices, given that Russia and Ukraine represent about 30% of the total world exports of wheat, in addition to about 14% of the total exports of maize, and more than 58% of global sunflower oil exports. For many African countries, the high dependence on wheat imports from Russia and Ukraine is a matter of concern. The value of Africa’s imports of agricultural products from Russia in 2020 amounted to about $4 billion, 90% of which is wheat.
-The impact of the crisis does not depend on the grain imports of the African continent, but also threatens food security in the continent as a whole, in which tens of millions suffer from acute food insecurity, as a result of successive strikes, as the Russian-Ukrainian crisis coincided with a number of variables, all affecting the situation of food security on the continent, including the Covid crisis, conflict, climate change, as well as the tripling of global commodity prices since 2020, which has pushed more than 50 million Africans in East African and Sahel countries to starvation, and reduced cereal production on the African continent of about 30 million tons.
– The current developments in the Ukrainian crisis will lead to an increase in international competition on the African continent, especially the Horn of Africa. Russia’s interest in that region not only depends on the economic dimension but it is also a promising market for the sale of arms. Rather, its interest expands to include the security dimension resulting from its keenness to increase its presence on the coasts of the Red Sea, the Indian Ocean and the Arabian Sea, and to strengthen its influence in those regions.
Third: Possible opportunities for the African continent resulting from the repercussions of the Ukrainian crisis
Despite the threats facing Africa as a result of the Russian-Ukrainian conflict, the crisis itself may carry potential opportunities and benefits for many African countries, including:
1-The Russian-Ukrainian conflict could provide the countries of the Middle East and North Africa with an important new influence with the United States and Europe, as another potential alternative to solve Europe’s energy problems.
2-The current rise in prices could lead to economic gains for African oil or gas producing countries, especially as European countries are working to find a quick alternative to Russian gas.
3- Although Africa represents one of the more reliable alternatives, the bulk of the oil revenues go to multinational companies, with a smaller percentage in favor of African countries. In addition, a country like Nigeria, which is the largest producer of crude oil in Africa, may not be eligible to achieve the desired benefit, as a result of its inability to refine oil locally and its dependence on imports.
4- Reviving African fuel and mineral resources exports to Europe: Tensions between Russia and Ukraine have generated a growing interest in European countries to search for a safe alternative to fuel supplies away from Russia, from which Europe imports (41% of natural gas), (47% of solid fuels) and ( 27% of private oil) according to 2019 statistics.
5- African countries such as Senegal, Niger, Mozambique and Tanzania are emerging as alternatives to European imports of fuel, but in the medium and long term, these countries contain large reserves but need huge investments to get them out.
6-More sanctions on Russia may benefit other exporters of natural resources in Africa. For example, South Africa is the second largest producer of palladium in the world, which is an important component of the automotive and electronics industries.
Fourth: Procedures of African international and regional organizations to deal with the crisis
The International Monetary Fund explained that the crisis in Ukraine has “significantly” affected the Middle East and North Africa region, as it has dealt a severe blow to low-income countries and are thus facing increasing pressures due to low levels of food security and heavy dependence on imports from Russia and Ukraine.
The World Bank has indicated that it is ready to respond with all available tools appropriate to the nature of vulnerabilities and shortcomings in African countries such as Morocco, Tunisia and Egypt, and that the effects of the crisis are expected to be more severe at the level of these countries’ public financial constraints.
The World Bank is also ready to provide support to the domestic production and commercialization of agri-food, and the management of agricultural risks and food reserves in countries exposed to shocks, whether through increased energy or fertilizer costs, or other factors such as crises related to drought and climate change.
The World Bank also announced its commitment to continue providing close and targeted technical and analytical assistance, especially to the hardest hit countries, in areas ranging from fiscal sustainability, reform of subsidy systems, food security, trade monitoring, and agricultural risk management, as it was the case when the region faced other crises.
At the regional level, the Board of Directors of the African Export-Import Bank “Afrixim Bank” approved the launch of the Trade Finance Program for Africa worth of 4 billion US dollars to keep pace with the Ukraine crisis (UKAFPA); It is a credit facility program developed by the Bank to manage the effects of the Ukrainian crisis on African economies and companies.
Finally, the economic repercussions of the Russia-Ukraine crisis on Africa remain uncertain. Despite the potential benefit of some African countries from the shift in global markets away from Russia due to the crisis, the potential short- and medium-term effects on the continent’s economic livelihoods and food security are particularly worrisome. The magnitude of the conflict’s potential impact, whether positive or negative, will depend on the scale of the conflict and the period of time it will take, but as the current crisis coincides with the Covid-19 crisis, as well as other crises in Africa, the recovery is likely to be slower, and the effects more severe.